VAT (value-added tax) is more than a profitable tool; it is a mechanism of economic management that can contribute to the economic development of the country.
VAT was introduced first in Germany, but France used it for the first time in 1954. Then, VAT quickly extended to other countries in the world, so that taxation of goods and services is common now in more than 110 countries such as Iran.
VAT is a multi-stage tax that can be used for economic planning purposes. VAT is a form of tax on services and commodities that customers pay it as an indirect cost.
The flexibility of this type of tax allows economic policy makers to guide production system. However, VAT is an efficient tool for encouraging and supporting policies both during the recession and economic boom.
In fact, governments lead economic capital to the desired section by exempting parts of the economy from VAT, providing prosperity in the manufacturing sector.
On the other hand, by imposing VAT on the distribution system and exempting parts of it, tax is served as a lever to regulate the market; This means that essentials products in most cases are subject to exemptions and consumers will be required to pay taxes to consume other goods.
Also, in such circumstances, people who consume more goods should also pay more tax. Therefore, VAT minimizes the possibility of tax evasion due to its direct link with the consumer. More importantly, it makes balance in favor of lower strata of society because people pay taxes on the amount of resources they use.
On the other hand, due to the impact of VAT on final prices of goods and services, governments can use it to control consumption patterns and purposeful management of production and distribution system of goods and services. Also, foreign trade exemption from VAT encourages exporters, resulting in prosperity in domestic production. Revenue from the export of goods re-enter the economic cycle, leading to the growth of liquidity in the manufacturing sector.
Excellent features such as high flexibility, low inflation impact, significant impact on market regulation, directing the production and distribution of goods and services in the country, and strengthening exports have encouraged economic planners to regard VAT as one of the most important tools.
Therefore, it can be argued that VAT is more than a profitable tool; it is a mechanism of economic management that can contribute to the economic development of the country.
All economists believe that tax revenue is the safest revenues of governments, but because oil revenues have been determining the fate of the economy in Iran, restructuring in this direction is simply not possible and it takes some years.
However, the economies of European countries and some Asian countries such as Japan, South Korea, Malaysia, Turkey, that do not possess oil and gas or their potential petroleum resources are not as much as Iran's, have surpassed our economy.
What more than any other factor has caused the economic development of such countries is the launch of a new and efficient tax system such as VAT.
Tax turns into a real income for the government and a mechanism for economic management when it reaches an ideal spot in the field of tax culture. Moreover, VAT should also be backed by strong economic structure to bring development and economic justice.